Renault Transfers 28% Stake in Nissan to French Trust, Revitalizing 24-Year Alliance

Renault SA has transferred 28.4% of Nissan Motor Co. shares to French trust, which the two automakers established. The result is a cross-shareholding of 15% between the automakers.

In a joint statement with Mitsubishi Motors Corp., the companies affirmed their commitment to lock-up and standstill obligations.

Rebalancing the 24-Year-Old Alliance

Amidst years of strained relations between the two partners, Renault and Nissan have completed a landmark deal aimed at rejuvenating their long-standing alliance. By creating trust, the automakers are paving the way for a renewed relationship after overcoming past acrimony.

The collaborative trust, first disclosed in January, has received significant attention due to its potential implications on the future dynamics of the alliance. It represents a departure from the traditional joint structures and establishes a new project-based approach to cooperation.

A Yahoo report noted that Renault managers have recently emphasized the need for autonomy, instructing staff to refrain from sharing information with their counterparts at Nissan. This move followed Renault's earlier announcement that certain aspects of the alliance would be unwound by the end of the year.

The forthcoming process of selling shares held by the trust will be closely coordinated with Nissan, according to Reuters. Notably, Nissan will have the right of first offer to purchase the stock. However, the trust is under no specific obligation to divest the shares within a particular timeframe.

Transition to a New Cooperation Model

As part of its strategic shift, Renault declared its move away from common structures with Nissan, favoring a more flexible project-based approach. Consequently, the dissolution of the companies' joint purchasing organization means that regular pooling of information will no longer take place, primarily due to antitrust concerns.

Months of intense negotiations led to the crafting of the new alliance deal, which was presented to investors in London in February. Last year, the discussions were perilously close to collapse due to disagreements surrounding intellectual property rights and the valuation of Renault's Ampere, its electric vehicle and software arm, in which Nissan has expressed an intention to invest.

The roots of the Renault-Nissan alliance can be traced back to 1999 when Renault's financial injection saved Nissan from dire circumstances. The collaboration between the two automakers became one of the most influential partnerships in the global auto industry.

However, over time, rivalries and mutual suspicion surfaced, reaching a climax when former leader Carlos Ghosn contemplated merging the two companies, ultimately leading to his downfall.

Renault plans to employ the proceeds from the sale of its Nissan stake to fuel further investments in its various divisions. Notably, these funds will be directed towards Ampere, the Alpine sportscar unit, and the company's recycling arm. Renault's Chief Financial Officer, Thierry Pieton, shared this information during a quarterly analyst call held last month.

“For us, it’s a question of allocating the capital to things that are going to provide a better return on investment compared to what we’re getting or what we’re expecting to get from Nissan,” Pieton said.

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